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By Steve RothwellASSOCIATED PRESS • Saturday June 1, 2013 5:15 AM

NEW YORK — A gradual decline in the stock market turned into a rout yesterday.

After moving between small losses and gains for most of the day, the stock market plunged in the
final hour of trading. The Dow Jones industrial average lost more than 200 points, half of them in
the last 15 minutes. It was the worst drop in six weeks.

Some traders said the sudden afternoon swoon came as large investors had to rearrange their
holdings to match changes in the widely followed MSCI indexes. Others said rapid-fire
automated-sell programs kicked in as the decline accelerated, exacerbating the loss.

By late in the trading day, the market appeared to be “feeding on itself,” said Mark Luschini,
chief investment strategist at Janney Montgomery Scott. “Why did we go from trading flat to down
200 points at the close? It suggests to me that it was driven by computer models.”

The market managed to hold onto gains for May, extending winning streaks for major indexes. The
Standard & Poor’s 500 index ended May with its seventh straight monthly gain, its best run
since 2009, but the last two weeks have been choppy. The index has declined on five of the past
seven trading days and had its first two-week decline since November.

Traders and investors have started to question whether this year’s record-setting rally has run
its course. Concern is building that the Federal Reserve might slow its $85 billion bond-buying
program. The program has supported the stock market as investors move money out of bonds and into
riskier assets. The bond purchases also hold down long-term interest rates to encourage borrowing
and spending.

The market appeared to be headed for an inconclusive day of trading after both encouraging and
disappointing news on the economy was reported. An unexpected decline in consumer spending in April
was offset by news that a measure of U.S. consumer confidence jumped in May to the highest level in
almost six years.

The late slide in stocks caught many market-watchers by surprise. Big investors might have
gotten spooked at the end of the day and sold, said Steven Ricchiuto, chief economist at Mizuho
Securities.

“In a thin market, all you need is one or two big money managers to reassess their view, and the
market can go down quickly,” Ricchiuto said.

In government-bond trading, the yield on the 10-year Treasury note rose to 2.13 percent from

2.12 percent late Thursday. The yield rose by half a percentage point in May and is the highest
it has been since April 2012. That has troubled some investors because a rapid rise in rates could
curtail borrowing and spending.

The yields on Treasury notes are benchmarks for setting interest rates on many kinds of loans to
consumers and businesses. The higher yields are already pushing mortgage rates higher. On Thursday,
the mortgage buyer Freddie Mac reported that average mortgage rates jumped this week to the highest
level in a year.

“People are worried a rise in interest rates might derail the recovery,” said Joseph Tanious,
the global-market strategist at J.P. Morgan Funds.

The Dow closed down 208.96 points, or 1.4 percent, at 15,115.57.

The loss was the biggest for the index since April 15, when markets plunged after worries about
an economic slowdown in China caused commodity prices to drop sharply.